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| CHAMBER NEWS |
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| Testimony Before the Senate Budget and Appropriations Committee Concerning Paid Leave Legislation - S 786 Presented by: Joan Verplanck, President, NJ Chamber of Commerce January 28, 2008 Thank you Chairman Buono and members of the Senate Budget and Appropriations Committee. Let me join those who testified before me in congratulating you on your Chairmanship of the Budget and Appropriations Committee. On behalf of the employers who make up the State Chamber and the local and regional chambers of commerce that make up our chamber network, let me highlight for you some of the concerns we have with the proposed paid leave legislation being discussed today. Actual Experiences from NJ employers I’d like to start my testimony by reporting on some specific experiences from the members of the New Jersey Chamber. Many of those in favor of paid leave in New Jersey point to California as proof that the impact to employers will be limited because of the low utilization rate. Larger companies who have contacted me point to their own experience with paid leave, where the actual current use rate is 8%, not 1.3% per year. The concern is that this bill will raise the use rate to 12%, which would add $1.6 million in costs to just one of our members in terms of the cost of replacement employees. This company already offers a fitness center and an on-site day care center for employees but will be faced with this additional cost at a time when all employers are facing challenges. Corporate New Jersey is competing hard for employees. Some worry that employees will seek a position with a company with the prior knowledge that they want to take leave, and the cost of hiring and training will go through the roof. Businesses are being asked to maintain the benefits for the person on leave while paying for costly temps with reduced productivity. In the face of a pending recession, timing has to be considered. We are asking New Jerseyans to double their tolls, pay more for local property tax – 40% of which falls to business – and absorb another payroll tax. Mothers already benefit from paid leave; perhaps that’s all we can afford right now. Employer/Employee Relationship The State Chamber favors legislation that strikes a balance between the needs of employers and those they employ. This balance is key in our economically competitive market. Legislation that tips the scale one way could result in the loss of a business or to limited growth for the state, both of which would hurt employers and employees equally. Paid leave is an example of legislation that tips the scale in the wrong direction. The State Chamber believes that government should avoid stepping in between the employer and the employee from a benefit perspective. Some employees want a greater 401 (k) contribution. Others might want to work a full week in just 4 days. And still others might seek flextime. These options are accomplished when employers and employees work together and not when government steps in and mandates a one-size-fits-all benefit package. Increased Overtime Costs Security companies, already struggling to manage the sales tax hit applied to their services retroactively, envision a sea of overtime payments to those left to handle the job of securing our most vulnerable companies and the people who work for them. Difficulty Finding Replacement Workers Currently there are a number of industries where it is difficult to find full time employees. This challenge will be made all the more difficult if the job offered is only for six weeks in duration. In addition, a number of industries require a license for employment. Casinos, realtors, insurance agents, and a number of others require licensed professionals to carry out their duties. It would be impossible to find a licensed professional to work for six weeks, so the employer would either be forced to ignore the customer or add to the workload of the employees who didn’t go out on leave. Either way someone loses in this scenario. Many of the assumptions made with regard to the necessity of paid leave legislation are based on life experiences – baby boomers had tremendous competition for jobs; now companies have tremendous competition for employees. In our current environment, however, unemployment rates are low and, particularly in New Jersey, skilled labor is hard to find. Many of my employer members look at paid leave through the prism of today’s realities. Most jobs require specific training and many require certifications, licensing and background checks. In a state already in the midst of a growing nursing shortage, where will we find short-term replacements for those taking leave? We struggle with the high cost of health care, yet behave as if the forced necessity for increased hospital overtime has nothing to do with it. My manufacturers operate in a globally competitive market, and worry that they will be forced to hire less trained replacement workers, increasing costs and reducing productivity and profits. Non-profit agencies who are Chamber members worry that paid leave will be harmful to our most vulnerable citizens. There is a shortage of direct-care workers and support staff. Organizations providing these services already have very generous paid leave policies in place. Leave provided over and above that already provided would lead to a serious shortfall of health, day program and employment services staffing. Paperwork Nightmare Small employers already list government paperwork as one of their biggest frustrations. Extending TDI in this way, and offering it to all employers regardless of size, will just ad to that burden and increase the frustration level of an employer group that has the potential to grow jobs and grow us out of these economically difficult times. Possibility for Fraud While we recognize that steps have been taken to try to address the possibility of fraud, offering someone leave so they can “provide psychological comfort” is opening up the system up to fraudulent claims. These are just a few of the observations from real employers in the state – employers that took the time to let me know their feelings about this initiative. I would ask once again that the Senate Budget and Appropriations Committee vote no on this legislation. It’s an initiative we can’t afford. Thank you for your time, and I would be happy to take any questions from members of the Committee. January 28, 2008 |
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© 1996-2008 · NJ Chamber of Commerce · 216 West State Street · Trenton, N.J. 08608 · (609) 989-7888 |